Introduction: 

Dubai has taken another bold step in shaping the future of digital assets. The Emirate’s Virtual Assets Regulatory Authority (“VARA”) has released the second edition of its crypto rulebook, reinforcing its commitment to a transparent, disciplined, and credible regulatory framework.

For anyone involved in Web3, whether building, investing, or advising, this update is for you. The new rules introduce stringent, and standardized compliance, ensuring a more secure and structured digital asset ecosystem.

Stricter Controls for Market Discipline: 

VARA’s updated framework introduces tighter regulations across several key areas. Virtual Asset Service Providers (“VASPs”) must now meet stricter licensing criteria. This includes the following: 

• Margin Trading: Companies must obtain explicit authorization from VARA before offering margin trading services.
• Token Distribution: New restrictions limit who can distribute tokens and under what conditions.
• Collateral Wallet Arrangements:  Only permitted with specific regulatory approval.
• Companies are required to hold adequate reserves to consistently fulfil their client obligations.

These measures ensure that only well-regulated entities can offer high-risk financial services, protecting investors and maintaining market integrity

Standardized Compliance Across All Virtual Asset Activities: 

One of the most significant changes is the unification of compliance standards across all virtual asset activities. This means that businesses engaged in all virtual 

• Advisory services
• Custody
• Exchange operations
• Lending & borrowing
• Investment services

will now be held to the same regulatory standards, promoting fairness in the market.

Unlicensed Entities:

Unlicensed companies will face new restrictions:

• Stablecoins and asset-referenced tokens can only be distributed by VARA-licensed entities.
• Closed-loop or non-transferable tokens must be distributed through a VARA-approved broker-dealer.

This means that businesses operating without a VARA license will have fewer opportunities, pushing them toward compliance or alternative business models.

Transition Deadline:

All VASPs operating in Dubai must align with the updated rulebook by 19 June 2025. VARA has provided a 30-day transition period and will offer tailored support to help companies comply.

What does this mean for the Market?

In the short term, businesses will face more paperwork, higher costs, and increased scrutiny. However, in the long run, these regulations will create:

• A stronger ecosystem with clearer rules.
• Greater investor trust in Dubai’s crypto market.
• Reduced risk for users and businesses.

Conclusion: 

VARA’s latest rulebook signals a maturing regulatory landscape. These updates are a part of a broader national strategy to position the United Arab Emirates (“UAE”) as a global leader in digital finance. The UAE is rapidly building the infrastructure for compliant digital asset adoption, reinforcing its position as a global hub for crypto innovation. Dubai is not just embracing crypto, it is ensuring it operates within a structured, and secure framework. For founders, and investors, this is the time to adapt and align with the new regulations. The future of digital finance belongs to those who take compliance seriously now.